ASHOKBHAI JAMNADAS PATEL,JAMNAGAR vs. THE INCOME TAX OFFICER, WARD-2(1)(3), RAJKOT-GUJARAT

Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.6,92,657/- imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961.

Brief facts of the case are that assessee has filed his return of income on 31.3.2008 declaring total income at Rs.1,24,471/-. During the year, the AO has got information that the assessee has deposited certain amounts in cash with Corporation Bank, Rajkot. On verification of pass book, an entry

After hearing both the sides, and a perusal of the order of the Tribunal cited supra, we find that, issue of quantum addition, as of now, is pending before the ld.CIT(A). Therefore, question of imposition of penalty under section 271(1)(c) does not arise now. Sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the additions made to the income of the assessee. Upto and until, the issue regarding determination of the taxable income is finalized, penalty under section 271(1)(c) of the Act cannot be imposed upon the assessee. The determination of taxable income of the assessee is subjudiced before the ld.CIT(A). After adjudication the issue of quantum, it will be in the discretion of the ld.AO to reinitiate or not to

In the result, the appeal of the assessee is allowed.